Valuing people’s well-being as benefits and costs

Accurately valuing the social benefits and costs of community
changes has proven elusive for policy and economic decision makers until a Charles
Sturt University (CSU) research project.

Dr Jenni Greig, who completed the study as part of her PhD
with CSU's Faculty of Business, Justice and Behavioural
Sciences, investigated how an individual's personal attributes and
community dynamics were related to personal well-being, and how these can be measured.
This represents a major first step in
including social impacts in cost benefit analysis (CBA).

"CBA is used by our policy makers to decide and justify
particular government policies and procedures that support health, education,
business and trade and other sectors," Dr Greig said, a member of CSU's Institute for Land,
Water and Society.

"The ability to include meaningful social impact information
in this decision-making is vital for the Australian community, especially in
regional, rural and remote areas, where less support and infrastructure can mean
greater costs for local communities."

Dr Greig conducted her research in the small and diverse NSW
communities of Bulahdelah, Hillston, Nyngan and Warren using interviews and
surveys. The study was carried out after substantial changes in these
communities, including severe drought, loss of local hospital services and
changes to major employment industries.

"During my research, I identified six personal attributes including
a person's occupation, perceived financial security and desire for community
contact, as well as six communal attributes including the levels of intimacy
and cooperation in their relationships and their commitment to community that
were related to a person's well-being," Dr Grieg said.

"Levels of satisfaction with each attribute were measured,
and these measures were modelled to show how much each attribute influences a
person's well-being.

"As I was particularly interested in how people and
communities experience change in these attributes as a result of changes in
their community, I asked people about past and current satisfaction, as well as
estimating their satisfaction in response to a hypothetical scenario," she said.

"The measures of changes experienced can then be used along with
the 'weighted' influence on wellbeing to estimate overall social impacts of
changes. The ability to express meaningful social impacts as numbers means that
we will be able to convert social impact values to economic values so they could
be included in CBA."

Dr Greig's colleague and her PhD supervisor, Professor Mark
Morrison, said her study provided a major insight into the valuation of social
impacts in the lives of people that can potentially be used for economic
decision making.

"Jenni's research has provided a major contribution for the
area of Social Impact Assessment by identifying important social impacts that
influence a person's well-being and that can be effectively measured and used
for cost-benefit analysis," Professor Morrison said.

"In the past, we've only been able to estimate social impacts
using broad data that indicate social trends and could not be directly incorporated
into a CBA. This approach has the potential to be far more useful and better
capture the nature and extent of social impacts."

Dr Greig confirmed that most people are able to express
changes in well-being in numbers when they consider specific attributes of
their life.

"My study demonstrates a robust way to estimate these
values, and when we collect this information across a community we can
understand how different people are affected, as well as the whole community,"
Dr Grieg said.

"This is critical when communities are faced
with natural disasters, sudden changes in major employment providers or when
decisions need to be made about government investment."